Core CPI/PCE Spread In November 2025, core PCE overtook core CPI for the first time since 2021 and has stayed higher, with the latest spread at -69 basis points. There’s a strong link between Core PCE/CPI spreads and economic contraction (aka recessions). Why? Because the Fed emphasizes Core PCE over the more volatile Core CPI, raising the likelihood of tighter monetary policy to control its preferred inflation gauge. Coupled with overlevered, overconcentrated, and overvalued markets, this puts markets at high risk of negative returns over the next few years. Source: Advisor Perspectives